As self-driving car companies continue to develop the fledgling technology, a local startup is already selling insurance to the industry. North Side-based Koop says it has cracked the code on how to underwrite the autonomous vehicle sector despite its short experience.
Driverless technology it still has to go through years of research and development before reaching consumers. Locally based Argo AI has started test robotics in miami in december and launched co-pilot in Austin last week. Aurora Innovation, also based in Pittsburgh, runs away self-driving trucks in texas.
Koop uses data from such test parks to determine coverage prices. It is preparing for a future of increased automation can be changed responsibility in the event of an accident from drivers to manufacturers.
Koop co-founder and chief operating officer Jim Duane said the startup helps fill a critical gap.
“Currently, what many commercial operators tend to do is go to traditional carriers to get a quote. But the process is actually quite terrifying,” he said. “In addition to filling out very long applications, you actually have to wait a long time before the insurers … give you a quote. And more likely than not, the offer you’re getting probably isn’t the best value for money.
Koop, on the contrary, willingly covers a range of duties, including technical errors, product defects and cyber hacks. Koop’s policies extend beyond autonomous vehicles and into robotics used in manufacturing, defense, healthcare and other industries.
Three of the company’s four founders graduated from the University of Pittsburgh. They founded Koop in 2020 and closed a $2.5 million seed round about a year ago. Duan said the company continues to grow steadily. He did not say whether it has generated a profit, noting that it remains focused on research and development.
“We’ve definitely seen a huge increase in interest [and] not just in the United States,” he said. “In the last week, we’ve had emails from Europe and also from Asia asking about coverage opportunities and their operations.”
Unlike Koop, conventional auto insurance emphasizes human-caused risks, Duan said.
For example, he said: “nowadays when we buy [auto] insurance for yourself, we only need to enter our demographic information [an insurance company’s] the application as well as the vehicle information.’
Using decades of data, underwriters determine risk scores based on such characteristics, allowing underwriters to generate quotes instantly. National Highway Traffic Safety Administration accused drivers for 94% of car accidents, according to a 2015 study. But by relying less on humans, self-driving cars are expected to reduce the risk of accidents.
Cup says its software accounts for this difference by using data from the vehicles themselves. Because of this, the company says it offers more competitive rates than other insurance providers. Duane said he has received very few claims so far.
Companies testing fully autonomous vehicles reported 130 crashes in an 11-month period ending in May, according to the National Highway Traffic Safety Administration. Only one resulted in serious injuries, and the airbags inflated in only two of them. All collisions occurred at low speeds.
Even the automated safety features that exist in many cars today are bound to reduce the cost of premiums charged by traditional insurers, according to consulting firm McKinsey and Co. provided for in a report last month that the trend could shrink the premium pool for the US personal auto insurance market by as much as 10% by 2030.
Duan said that as a startup, Koop was able to move faster than legacy companies to develop a model to ensure fully autonomous systems. He hopes that by having his insurance platform in place, Koop will help put consumers at ease about the new technology.
“When it comes to commercializing the whole [driverless vehicle] industry,” he said, “insurance is definitely going to be a huge factor.”